A new forecast of the commercial property market from Robert  Irving Burns (RIB), estimates that the commercial property price per sq ft will drop by 2.9% in Q1 2023. The office sector is predicted to see the largest fall in sales prices per sq ft, at -3.1%. RIB also predicts that Q1 will be a ‘buyers’ market’ with supply forecast to increase by 1.7%.

In a survey of over 8,000 UK commercial estate agents, the Robert Irving Burns Commercial Property Report also forecasts that commercial rents per sq ft will fall by 1.3% on aggregate.  
Antony Antoniou, managing director at RIB, comments: “While this is not, yet, the winter of discontent that some had predicted, we’re a far cry from the growth we were promised earlier this year. Predictions for Q1 2023 are decidedly negative as values and rents tumble off of a cliff edge.

“The latest and in my view unnecessary, Bank of England interest rate rise is only going to prolong the pain. It is the fastest tightening of monetary policy in the MPC’s history and with inflation subduing, raw material prices falling, five-year interest swaps dropping, and unemployment rates still historically low (3.7%), there is a real and present risk of stagnation in this sector – wiping up to £14bn off of portfolios at the latest estimate from Goldman Sachs.”

Antoniou makes the following predictions for the three biggest commercial property sectors:
 
Offices
Sales: In spite of the resurgence and innovation we have seen within the urban office market post-pandemic, sales prices per square foot are predicted to fall by 3.0% on average in Q1 2023. However, 31% of respondents believe that office sales prices could fall by more than 5% in Q1. But it will be a tale of two markets, with prices expected to be protected in the luxury and sustainable segment within the market, and those with lower energy efficiency suffering the brunt of this downturn.